Hangouts – more than a Skype killer?

Communications market is going through an invisible revolution. This shows in high quality dedicated solutions becoming cheaper, in people getting more used to replacing traditional meetings with video ones, and above all, in the resulting changes in related business models. As already expected, Google has become the disruptive player, the “bad guy”, the changer of the game. Its recent moves have forced the whole industry to re-think their strategies and even identities.

Google+Hangouts isn’t really that much different from other unified messaging solutions such as Microsoft Lync, or consumer-oriented free video messengers like Skype or Facetime. It uses partly more advanced technology than its competitors, but basically the idea is the same.

In Google’s case nothing just is self-evident. The co-operation between Google and Israelian-American Vidyo has already produced something that can cause sleepless nights for some players: a (more or less) free, quality- and featurewise good enough collaboration and messaging solution which apparently includes just about everything a small or even middle-sized organization may need. Now Google and Vidyo can together offer high quality video meetings which work with competing solutions and even expensive traditional meeting room systems. Basically, all you need is a decent external camera and a speaker microphone, and in some cases not even those. A smartphone is enough.

What is good enough?

What makes Google so dangerous for its competitors? Reasons are numerous, but in this case we’re talking about a more-or-less free and good enough toolset for both consumers’ and organizations’ messaging and collaboration. Competitors with their still relatively expensive solutions may claim to have, for example, better picture quality. Many people will still just shrug and say: “It may be so, but Hangouts is still good enough for us.”

Yes, good enough. There will always be special needs where better or more tailored tools than Google’s set will be required, but in many cases all that matters is that things simply work well enough, and in this case, almost for free. It is hard to make a much better value proposal. Gmail is a good example. Its browser user interface is still, after years of tuning, pretty awful, but for one reason or another, most people seem to have an e-mail account from Google. Gmail is almost a synonyme to e-mail these days. It is good enough and it is free or cheap.

Microsoft has good reasons to fear the moment when Google decides to update their Documents tool set to match Microsoft Office in appearance, functionality and usability. That isn’t the case yet, but nothing prevents Google from competing seriously with Microsoft in collaboration area too. Google’s pieces are, as has been their trademark, more or less unfinished and they don’t always work great with the rest of the world, but even now the previous dominance of Microsoft in people’s lives and companies is turning into Google dominance. Since Google’s core business is not office software or, for example, video meeting solutions, but all this supports their real core business (information), it can use very disruptive pricing models to haunt companies like Microsoft and Apple. Google could even give hardware away for free, or at least very cheaply, if need be. They can afford it.

How to play against a gambler who re-defines the rules of the game?

How can other video meeting solution providers compete against “free” and “good enough” Hangouts in the future? The prices of hardware will continue to drop, probably quite considerably, and the user licensing models may have to be improved for more flexibility. The devices themselves will become less important the same way Netflix -like web video services have largely replaced DVD- and BluRay players in many homes. Everything is in the Internet, and modern tablets, smartphones and computers are quite capable of handling video meetings, especially when equipped with external mics and cameras. So, should all companies use Hangouts instead of more expensive, dedicated video meeting solutions? Nope. There are limitations.

One obvious limitation for many corporate users especially is the need for having a Google account. Although many people already have one, many also don’t and probably won’t. Sending meeting invitations isn’t as handy as in some dedicated solutions like Vidyo’s. Google’s support isn’t exactly known for its excellence. Reliability neither. “You get what you pay for” applies here. Sometimes your Gmail works, sometimes it doesn’t, and Google tends to change its applications all the time. Not all those changes have been improvements. Living and working in Google universe is kind of an adventure in a sense that whatever is here and works today may be elsewhere or even gone tomorrow. This is not necessarily good in business environments.

Dinosaurs go extinct but Internet goes everywhere

It would, however, be a mistake to think that there still are entirely separate markets for consumer level solutions and business/corporate solutions. The difference still exists in, for example, high-end video meeting solutions where already the cameras are top class, but otherwise these two markets are rapidly melting together. Google is a perfect example, since Hangouts can be equally used for dating and business meetings. The same applies to Gmail. Charging extra just because a solution is a “business solution” becomes more difficult when disruptive players like Google destroy the old pricing structures.

The total video messaging market is growing all the time, but this doesn’t necessarily translate into more revenues, especially for companies who strongly rely on hardware sales. Traditional high-end meeting room telepresence systems are in decline, because more and more companies realize that they can do quite well without them. The industry is going through re-inventing themselves and their business models. Those who can adapt quickly will win, and those too slow or rigid to change will go the way of the dinosaurs. Some may see Google as a threat to their business, and often for a good reason. Things like Hangouts do change the market, but they don’t destroy it. In the long run companies will still need more advanced, more reliable, better suported services for premium price. Hangouts teaches people to use video messaging in their everyday lives, and in doing that, it actually benefits the industry. Besides, Google won’t go away anytime soon. One just has to learn to live with it, and find a natural place in this new, ever-changing Internet-based services ecosystem.